Sequence risk can dwarf a sub‑3% COLA—guardrails and rebalancing matter more. A fiduciary approach is the key to maximizing income, hedging for risks, and strengthening asset portfolios, but how does it work? Learn more at https://www.goldstonefinancialgroup.com/
When senior advocates at The AARP and The Senior Citizens League echo the forecasts of financial journalists at Kiplinger, it's time to pay attention. This year, the message is unanimous: early projections point to a modest 2026 Social Security cost-of-living adjustment. While any increase helps, COLA is only one variable in a complex retirement planning equation that also includes healthcare costs, taxes, and portfolio withdrawals. A practical approach treats COLA as an input to an annually updated plan rather than a standalone solution.
COLA: What Are The Risks?
COLA is intended to preserve purchasing power, not expand it. Healthcare inflation, potential Medicare Part B premium increases, and tax interactions can dilute the headline percentage. In market years with higher volatility, sequence-of-returns risk can play a larger role in outcomes than a sub-3% benefit adjustment. The result: net monthly cash flow may change less than expected unless coordinated across income sources and expenses.
Key Considerations for 2026:
COLA and healthcare costs rarely move in lockstep; medical inflation has historically run hotter than overall CPI. Medicare premium changes and IRMAA thresholds can erode COLA gains if taxable income drifts higher. Withdrawal strategies benefit from flexibility; static, set-and-forget distributions can underperform in shifting markets. Tax location and timing matter; blending taxable, tax-deferred, and Roth sources can reduce lifetime taxes versus focusing on a single year. Liquidity buffers for essentials can reduce pressure to sell risk assets after down quarters, preserving long-term portfolio durability. Implications for Fiduciary RIAs:
For fiduciary RIAs, a modest COLA reinforces the importance of integrated planning over product selection. Firms like Goldstone Financial Group, led by Founder and CEO Anthony Pellegrino, are likely to prioritize cash-flow engineering by aligning Social Security adjustments with dynamic withdrawal policies and spending guardrails. Tax-aware coordination becomes essential, calibrating IRA and RMD withdrawals to manage taxable income and Medicare brackets, while evaluating Roth conversion windows when markets or incomes are temporarily lower. Healthcare modeling deserves renewed attention by updating premium assumptions, revising out-of-pocket estimates, and incorporating long-term care scenarios into stress tests. Risk management focuses on maintaining multi-bucket reserves, refining asset location, and applying consistent rebalancing rules to mitigate sequence risk. Client education remains foundational, translating small annual COLA changes into practical portfolio and tax decisions, and emphasizing process discipline over headlines.
Advisor oversight is central here: advice aligns with the client's best interests, documents rationale under evolving market and policy conditions, and applies a repeatable framework. This elevates services that integrate Social Security, taxes, investments, healthcare, and legacy into a single plan, rather than addressing each in isolation.
The Fiduciary Approach Is The Future
COLA is a helpful signal but not a strategy. A coordinated 2026 plan—spanning income, taxes, healthcare assumptions, and portfolio risk—can help preserve net spending power through different market and inflation regimes. Consider a retirement framework, such as a comprehensive Retirement Roadmap, before planning for 2026.
If you're considering working with a financial advisor, ask direct questions about their fiduciary approach. It's the question that matters. For more, visit the website linked in the podcast notes.
Disclaimer: Information is for educational purposes only and should not be considered individualized advice. Social Security COLA and Medicare premiums are subject to official announcements and may change. Goldstone Financial Group recommends consulting with qualified financial advisors. Click on the link in the description to book your consultation today. Goldstone Financial Group City: Oakbrook Terrace Address: 18W140 Butterfield Road Website: https://www.goldstonefinancialgroup.com/ Phone: +1 630 620 9300 Email: contactus@goldstonefg.com